SAT Denies Gensol Engineering's Plea Against SEBI Ban Over Fund Diversion Allegations

The Securities Appellate Tribunal (SAT) on Wednesday dismissed Gensol Engineering Ltd’s request to stay a Securities and Exchange Board of India (SEBI) interim order that barred the company and its promoters, Anmol Singh Jaggi and Puneet Singh Jaggi, amid serious allegations of fund misappropriation and governance failures.

The SAT bench, comprising Justice PS Dinesh Kumar and technical member Meera Swarup, declined to grant interim relief and instead directed Gensol to respond to SEBI’s ex-parte order within two weeks. SEBI, in turn, was instructed to deliver a final decision on the matter within four weeks.

The tribunal’s directive comes in the wake of SEBI’s detailed interim order dated April 15, which laid out troubling findings from its probe into the functioning of Gensol. According to the regulator, the company's promoters allegedly used the firm as a "personal piggy bank," siphoning off loan funds and failing to maintain proper financial controls.

Between FY22 and FY24, Gensol obtained loans totaling Rs 977.75 crore from the Indian Renewable Energy Development Agency (IREDA) and the Power Finance Corporation (PFC), earmarked primarily for the purchase of 6,400 electric vehicles. However, only 4,704 EVs were acquired, valued at Rs 567.73 crore, as confirmed by supplier Go-Auto. The remainder of the funds was allegedly diverted to the promoters or affiliated entities.

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Inactive EV Manufacturing Facility

SEBI's investigation further revealed that Gensol's EV manufacturing facility in Pune was inactive, with just a handful of laborers on-site and no actual production underway. Additionally, the premises were found to be leased rather than owned by the company.

In a more serious allegation, the company is accused of fabricating letters from IREDA and PFC to mislead credit rating agencies and investors into believing it was regularly servicing its loans. This deception unraveled when the agencies contacted the lenders for verification.

Adding to Gensol’s legal troubles, the PFC has lodged a formal complaint with Delhi Police, accusing the company of submitting falsified documents to secure funding intended for electric vehicle purchases.

Gensol Engineering is the parent firm of BluSmart, an all-electric ride-hailing service. The unfolding regulatory and legal scrutiny now casts a shadow over both its operations and its future in India’s growing EV sector.

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